Brent crude prices have plunged following the announcement of a US-Iran memorandum of understanding and anticipated reopening of the Strait of Hormuz, according to Societe Generale analysts Kenneth Broux and team. The benchmark has tumbled 35% from its April highs, though prices remain elevated compared to pre-conflict levels.
The sharp selloff reflects immediate market relief over reduced geopolitical tension in the critical Middle Eastern shipping corridor, which handles roughly one-fifth of global oil traffic. The diplomatic breakthrough between Washington and Tehran has eased supply disruption fears that had kept risk premiums inflated throughout recent months.
Traders and energy-focused portfolios are witnessing significant volatility as the market reprices oil amid shifting geopolitical dynamics. While the decline marks substantial pressure on crude, Societe Generale emphasizes that key technical support levels are now in focus as prices stabilize above pre-war baselines.
FXnCO Insight
Energy traders should monitor technical support levels closely as Brent’s rapid descent creates potential entry points, though lingering geopolitical risks suggest maintaining cautious position sizing until the Hormuz situation fully normalizes.
Source: FXStreet